Short Sale Guide for Real Estate Professionals
I recently received two new short sales from a Foreclosing Lender that I have done a lot of work with. I attached a great breakdown from SunTrust Mortgage and how they go about doing there short sales, what their process is and also what their timelines are. Save the SunTrust short sale requirements for your future short sale!
Here it is:
“SunTrust Mortgage, Inc. (STM) is dedicated to careful counseling and responsible lending, and we view foreclosure as the last resort for customers experiencing financial difficulty. Foreclosures hurt everyone involved— homeowners, lenders, communities, and the economy as a whole. Our goal is to help our customers be successful homeowners through responsible lending. One of the options available for assistance may include the Short Sale.
What Is A Short Sale?
A Short Sale is a workout option that allows the homeowner (mortgagor) to sell the home for less than the total amount owed on the mortgage. Upon final approval, a Short Sale can help mortgagors avoid foreclosure action. Although there will still be an impact to the mortgagor’s credit history, the effect will be less than if the foreclosure had occurred. The mortgagor’s credit report will be noted as follows: “Settled for amount less than owed.”
How to Get Started (Short Sale Package requirements)
- The homeowner must call the SunTrust Mortgage Short Sale Phone Team at 800.443.1032, Option 3. The Short Sale Phone Team reviews the mortgagor’s financial information and completes short sale counseling.
- The mortgagor and his/her real estate agent then assemble a Short Sale Package that contains: from the mortgagor:
- last two (2) years tax returns
- two (2) most recent bank statements
- third party authorization form (to speak with real estate agent, attorney or other 3rd party)
- completed financial form
- two (2) most recent pay stubs from the real estate agent:
- Arm’s Length Transaction document
- HUD-1
- listing agreement
- fully executed purchase contract
3. The mortgagor (or designated third party) faxes his/her information to (telephone number). The real estate agent faxes the complete Short Sale Package to 804.675.7399, Attn: Setup
Documents Required To Begin an Application from the mortgagor:
- Fully executed listing agreement
- Signed and dated financial worksheet listing all monthly expenses
- Signed and dated hardship letter (an explanation of why the homeowner is unable to pay the mortgage)
- Letter authorizing the real estate agent access to information on the account (must be dated and include the last 4 digits of the mortgagor’s Social Security Number and signature, the full account number and the complete property address)
Short Sale Approval Process
- Once all documentation is received (please refer to “Short Sale Package” requirements), the short sale team completes a property valuation (appraisal or BPO per investor requirements).
- The short sale file is then assigned to a negotiator on the short sale team who will review the file including the documentation and the offer.
- If there is any missing documentation or request for more information, the short sale negotiator will contact the designated third party or the mortgagor.
- Once all of the required documentation and information is received and in order (refer to “Short Sale Package” requirements), the short sale negotiator recommends approval to the investor and/or insurer. If the short sale offer is acceptable, the negotiator drafts and sends an approval letter to the borrower(s) and/or the designated third party. The short sale negotiator then works closely with the real estate agent, title company and the mortgagor to establish a final settlement date. The short sale approval is good for up to 45 days.
Additional Information
Short sale approval is good for up to 45 days. If closing does not occur within 45 days, the entire Short Sale Package may need to be resubmitted with updated information, or the approval process may need to start over.
The real state agent or STM mortgagor/designated third party should direct their inquiries 1.800.443.1032, Option 3. The Loss Mitigation Team will answer their questions regarding the status of the account. The call will be forwarded to the short sale negotiator as appropriate.
Real estate agents are generally allowed 5% to 6% commission based on investor rules. If dual agency applies, maximum commission is 5%. Some investors operate on a reduced commission structure and the actual commission schedule can be confirmed during the introduction call.
The short sale must be an “arm’s-length” transaction. The property may not be sold to anyone the seller has a close personal or business relationship with, including family, friends or neighbors.
During the discussion with the short sale negotiator, the following will be addressed:
- Commissions
- Fees and costs
- Pricing of the property
- Timeline
- Borrower Contribution
In some cases investors and/or Private Mortgage Insurance (PMI) companies require mortgagors to make a cash contribution or sign an unsecured note for some or all of the difference between the net proceeds from the sale and the total amount due. This is communicated as part of the response on a short sale offer.”
| Event | Timeline (Business Days) |
Total Process (Business Days) |
| Complete short sale application received. Note: Incomplete application will delay review/approval process. |
3 | 3 |
| Property Evaluation completed (appraisal or BPO per investor requirement.) | 10-17 | 20 |
| Short sale application assigned to Loss Mitigation Negotiator | 1 | 21 |
|
5 | 26 |
Additional Steps:
|
10 | 36 |
Once All items above are complete…
Short Sale Application decision.
Short Sale Decision letters issued to appropriate parties.
9 Responses
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Very well written. This is the kind of information that is useful to those want to increase their SERP’s. Keep up the good work.
I am currently trying to buy a short sale home and the owner’s lender is Sun Trust. We started the process on February 12 (first offer). Sun Trust called with the appraisal value on Good Friday, and we countered. Finally, on April 14, we signed a new contract with the “bottom line” cost that Sun Trust said they needed. We are still waiting waiting and waiting some more to get the “short sale approval” so we can move on. We don’t want to risk renting our current house to someone else without this approval (because if our house rented and this deal fell through we’d have nowhere to live!) I feel like Sun Trust is dragging their feet on this…it’s been WAY past the timeline given in this article.
I am trying to purchase a short sale home that suntrust holds the second mortgage on. We sent in the contract with all the correct paperwork at the end of March and still have not heard anything from Suntrust. I feel this time-line is completley inaccurate. We are the ONLY contract on the house and the bank which holds the first mortgage has accepted the offer but suntrust has dragged their feet for over 130 days…. And any phonecalls to the “short sale negotiator” by the selling agent usually are not returned.
I am a buyers agent representing the buyer trying to purchase a Suntrust clients home short sale. The buyer was full of such hope as to this process and having an answer in the time frame published by Suntrust. The time frame is way off and we are still looking for an answer. I know you cannot speak with me regarding the loan. I would like to be contacted in regard to timing or have you contact the listing agent as I do have an adress. Your consideration regarding this matter would be appreciated.
I am heaving a dreadful experience with Sun Trust. SS file submitted in September and on January 5th it is still in “set up” department. Noe escalations that they can do for me. No help whatsoever. BPO was never ordered and a negotiator was not assigned since it was submitted. Did someone had a file approved in a reasonable time with them in 2009?
I am having a dreadful experience with Sun Trust. SS file submitted in September and on January 5th it is still in “set up” department. No escalations that they can do for me. No help whatsoever. BPO was never ordered and a negotiator was not assigned since it was submitted. Did someone had a file approved in a reasonable time with them in 2009?
I just wanted to stop in and let you know that I really liked this post. It was full of fresh information and creativity, both of which we always can use more of.
I represented Buyers in a short sale with Sun Trust and after seven months never recieved an approval from them. They finally auctioned the property after the listing agent asked for a postponement of foreclosure. I would have been ecstatic if I would have recieved an answer with 3 months. My Buyers lost their loan lock, postponed moving plans, gave up their hopes and dreams.
We have been waiting eight (8) months for some action, any action from Sun Trust on our short sale bid. We have been assigned two negotiators and two BPO’s have been done. But, still no answers or questions from Sun Trust. We are in the same position we were last October 09. We have passed on other properties figuring that this couldn’t take this long and that we would have been settled by now. This property has now been unoccupied for almost two years without any electricity or air conditioning. It seems that Sun Trust is willing to let this asset deteriorate.